This past Friday, President Trump signed two executive orders that may each have a direct impact on importers into the U.S. market. Under the first, President Trump has directed the Secretaries of the Treasury, Homeland Security, and Commerce to develop a plan within 90 days to enhance the requirements imposed on risky importers (called "covered importers" in the order) to secure payment of antidumping and countervailing duties. In the order, U.S. Customs and Border Protection ("CBP") will be tasked with evaluating the relative risk of importers, but will clearly be focusing on new importers and those who have either failed to pay antidumping or countervailing duties in the past or failed to pay these duties in a timely fashion. The government is similarly being directed to create a plan for stopping the importation of "inadmissible" merchandise using means other than seizure. These plans must be completed within 90 days of the March 31 order, meaning that we will not know precisely what measures the U.S. Government will try to implement until roughly June of this year.
We have noticed increased activity on the part of CBP in terms of audits and requests for information against importers who purchase large amounts of steel or aluminum products. Historically, steel and aluminum have been considered "high risk" by CBP because of the possibility that antidumping orders may apply. This may very well be part of a growing trend under the Trump Administration to increase scrutiny of trade. However, other than rooting out importers who have been evading antidumping and countervailing duties, it is not yet clear what the Administration is aiming to do. The first executive order does call upon the Secretaries of Treasury and Homeland Security to ensure that the U.S. Government will increase the sharing of information with intellectual property rights holders, to help investigate the possible importation of infringing merchandise. The order also directs the Attorney General to work with the Homeland Security Secretary to prioritize prosecution of "significant offenses" under U.S. trade laws. This may be a signal that the federal government is considering using more criminal sanctions than it has in the past. However, until the Attorney General produces guidelines in response to the President's order, it is not clear what sorts of offenses will trigger the interest of federal prosecutors. In the past, criminal prosecutions have been very rare, particularly for importers who cooperate with CBP and are able to tender unpaid duties.
The second of President Trump's March 31 orders directs the U.S. Trade Representative and the Secretary of Commerce to study the causes of the United States' trade deficit, and gives them 90 days to do so. This report would presumably be in addition to the U.S. Trade Representative's regular annual report on trade barriers. Commentators suggest that the President's directive is designed to provide political support for his Administration's positions with China during talks on trade. U.S. Commerce Secretary, Wilbur Ross, pointed out on Sunday that the U.S. has not systematically studied its trade deficit country-by-country. He suggested that much of the trouble with the deficit may have to do with dumping, subsidies, and duty evasion.
We will continue to monitor the federal government's progress in responding to the President's directives, as well as the activities of CBP with respect to importers. At this time, no new legal requirements have been imposed, however, the President's orders call for new requirements to be in place for U.S. importers by this summer.